All that rises also falls. So it is in the natural world and human institutions.
The slide in the U.S. stock market is an example of the latter.
The part of the story that’s missing in the mass media generally is the force
that drove investment to the U.S. stock market in the first place. In brief, it
was a crisis of overproduction.
Industry after industry had made more products—autos to computer chips—than
could be sold for a profit on the market. Market saturation of a particular product
didn’t happen by itself. The “why” of the story is that the working majority hasn’t
been able to buy what it has made.
Accordingly, overproduction reduced profitability for those who buy labor-power.
No profits, no investment in more productive capacity. The result was lots of
money with no place to go.
What to do? The response from the titans of the global market economy was twofold.
One was that investment migrated from industrial production to financial speculation.
The other was the destruction of productive capacity. The International Monetary
Fund and World Bank in part enforced policies that purposely plunged Third World
and newly industrialized nations into depressions that devastated people’s living
standards.
In the meantime, investment seeking profits flowed into the U.S. stock market.
Want proof? The Dow Jones Industrial Average rose 14-fold between Aug. 12, 1982
and June 5, 2001.
For some, the good times rolled. That roll is drawing to a close. There are
many consequences.
Here’s one. The New York Times of June 21 reported that the value of the dollar
was at a 24-month low versus the euro. The high value of the greenback has been
a factor facilitating the flow of foreign funds into the U.S. to help consumers
and corporations live beyond their means (income versus expenditures).
This unsustainable trend of U.S. spending based on lending was given a boost
by the nation's high-flying stock market. Its downturn has cast a cloud of doubt
on the continuation of investment from abroad into the world’s lone superpower.
One thing is certain. Having the world’s biggest military doesn’t guarantee
that a nation’s currency will reign supreme. The rising military might of the
U.S. and the falling value of the dollar are proof of that.
James P. Pinkerton, a Newsday columnist, recently noted the criminal actions,
including “aggressive accounting,” that have battered Wall Street, adding that
the stock market has more room to fall. He wrote: “And for most Americans mindful
of their financial future, the real problem is that the bull market of the 1980s
and 1990s is over.”
But describing the end of what some have called the speculative boom of all
time by sidestepping what led to its creation covers up what needs to be covered.
Namely, that a market economy system based on production to meet the needs of
investors instead of human needs is the problem for the vast majority of humanity.
The solution to this problem is a social question. The time for independent
visions of socio-economic organization is now.
Seth Sandronsky is an editor with Because People Matter, Sacramento's progressive
newspaper. Email: ssandron@hotmail.com
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